Mortgage Refinance Calculator

Refinance when the interest you save repays the closing costs well before you expect to sell, and when the new loan ends at an age that fits your plans. Everything else is detail. A retiree does not need a lower payment as much as a younger borrower does; what matters is how much the loan costs from here, and whether it will still be there when you want the equity for a move, for care, or for your heirs.

Three things change the answer after 60. The horizon is shorter: a planned downsizing or a move nearer family can end the loan in five or ten years. The term matters more: a new 30-year loan at 63 runs to 93. And income is changing: a lender treats a paycheck, a pension and IRA distributions differently, so timing the application matters. The calculator above handles the first two; the sections below cover the rest.

With the calculator's defaults, a hypothetical couple owe $290,000 at 7.25% with 26 years left, a payment of $2,068. A 20-year offer at 5.75% with $5,500 of closing costs leaves the payment almost unchanged at $2,036, recovers the costs in 15 months, leaves them $60,544 ahead after the 12 years they expect to stay, and ends the mortgage at 83 instead of 89.

It is the first month in which the interest you have saved is at least equal to the closing costs. The calculator works it out month by month:

Payments saved plus the lower balance owed equals the interest saved, because every dollar of a payment is either interest or principal. The familiar shortcut, closing costs divided by the drop in the monthly payment, ignores the balance. It gives the right answer only when the new loan is about as long as the old one. Shorten the term and the payment may fall by a few dollars or rise, so the shortcut says the refinance takes decades to pay off, or never does, when in fact it is recovering its costs every month through faster principal repayment. The calculator shows both numbers so you can see the difference.

The net gain over the years you stay is the headline because it is the money you will actually keep. If you sell in year 12, whatever the new loan would have saved in years 13 to 26 never reaches you. The lifetime comparison below the results answers a different question: which loan costs less if you keep it to the end.

Usually the shortest term whose payment you can carry comfortably in retirement, ending by your early 80s. The table shows when each term ends for a borrower refinancing at 63:

A 30-year loan is not always a mistake. Its lower required payment is a form of insurance: in a bad market year you can pay only what is due and avoid selling investments. If you take it, set up an automatic payment at your old amount. The calculator shows how quickly the new loan is repaid that way; with the defaults, a 30-year loan at 6% paid at $2,068 a month is gone in about 20 years.

Think about the payment in the years before Social Security if you are delaying it. The mortgage is often the largest fixed bill in those bridge years, when the portfolio pays nearly everything. The guide to claiming Social Security and the retirement withdrawal calculator help test whether a higher payment fits.

Yes. A lender generally cannot deny a loan, or charge higher rates or fees, because of your age, and it cannot refuse to consider pension income. It can look at how much income you have and whether it is likely to continue (Consumer Financial Protection Bureau). Social Security award letters, pension statements, annuity contracts and a record of regular IRA distributions are the usual evidence.

In practice, the application is simpler while you still have a paycheck. If you are within a year or two of retiring and a refinance makes sense, consider applying before the last day of work. Households with large portfolios and modest reported income sometimes find that the lender wants a documented distribution history; starting a regular monthly IRA or brokerage withdrawal a few months ahead can help. Ask each lender how it treats retirement assets before you pay for an appraisal.

If your current rate is below today's, borrow against the house separately and leave the first mortgage alone. A cash-out refinance replaces the entire loan at the new rate. Taking $50,000 out of a $200,000 mortgage at 3% by refinancing to 6.5% raises the rate on the $200,000 you already owed, not just on the new money.

• Home equity line of credit (HELOC). Borrow only what you use, when you use it. The rate is variable, and the lender can freeze or reduce the line, often when house prices fall. Useful as a standby for a large repair or to bridge the gap between buying a new home and selling the old one.
• Home equity loan. A fixed amount at a fixed rate with a set repayment schedule. Better than a HELOC for a known, one-time cost such as a roof or a renovation to age in place.
• Cash-out refinance. Makes sense when the new rate is no higher than your current one, or when you need a large sum and want a single fixed payment.

Interest on any of these is deductible only if you itemize and the money buys, builds or substantially improves the home that secures it (IRS Publication 936). Borrowing against the house to pay for a car, a gift to a child or living costs brings no deduction. For homeowners 62 and older who want no monthly payment at all, the FHA's Home Equity Conversion Mortgage is the alternative; it requires counseling from a HUD-approved agency first (HUD).

Often not. In 2026 a married couple filing jointly who are both 65 or older have a standard deduction of $32,200 plus $1,650 each, $35,500 in total (IRS, 2026). A $290,000 mortgage at 5.75% generates roughly $16,500 of interest in its first year. Unless that, your state and local taxes and your charitable gifts together exceed the standard deduction, the interest saves you no tax at all, and the calculator's pre-tax comparison is the right one.

If you do itemize, the after-tax saving from a refinance is somewhat smaller than shown, and points paid on a refinance are generally deducted over the life of the loan rather than all at once. If you give to charity from an IRA after 70½, a qualified charitable distribution may make itemizing even less likely.

• Closing costs rolled into the loan. The calculator assumes you pay them in cash. If you finance them, add them to the balance and set closing costs to zero.
• What the cash could earn. Money spent on closing costs, or on a higher payment for a shorter term, could otherwise stay invested. On a fixed-rate mortgage above 6%, paying it down usually beats safe investments, but not always stocks.
• Taxes. Figures are before tax. See the deduction section above.
• Adjustable rates. The comparison assumes fixed rates on both loans.

If you are weighing a smaller home instead of a cheaper loan, the downsizing guide covers the costs of moving, the capital gains exclusion and the case for renting.